Commentary and analysis on markets, personal finance, and wealth building from a contrarian perspective. "I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting there and trying to dream it up all yourself. Nobody’s that smart."
— Charlie Munger

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Tuesday, October 17, 2017

VW fails to secure cobalt supply for electric vehicles

In one of the clearest signs of a tight cobalt market, Volkswagen has failed to secure a long-term supply of cobalt used in electrical vehicle batteries.The German carmaker last month put out a tender seeking a five-year supply of the strategic metal at a fixed price. But people familiar with the deal said the offer was well below market prices. Cobalt has more than doubled in price from a year ago, when it was trading around $12 a pound, to its current $27.10 a pound as of last Thursday.(snip)According to the FT, the VW tender requires the supply of 80,000 to 130,000 tonnes of cobalt, in a market whose total supply is just over 100,000 tonnes a year.

And the last sentence sums up the problem for EV's, not enough cobalt to go around. Plus the majority of the cobalt that is available comes from the Congo and the Chinese locked this up already.

So we have a very actionable opportunity in that governments, carmakers, journalists, the jethros, and shoeclerks all think EV's are the next big thing. Not with cobalt based cathodes I am thinking.

Other battery technologies exist that use no cobalt but they do not give the range that is needed to make EV's viable and in demand. No one wants an EV that has a 100mile range.

I own a speculative position in Cobalt 27 Capital. I am also short Tesla via long dated out of the money puts as I beleive Saint Elon does not have his cobalt supply secured either. I also think the predicted demise of the oil industry is premature and I think oil prices are going higher.